ARDOVA: Analysts Guide ‘Hold’ Ahead of Takeover
Ahead of planned shares mop up by Ignite Investments & Commodities Limited, Afrinvest, an investment firm has advised investors to be neutral in trading Ardova Plc shares.
The company with 1.302 billion outstanding shares have about 332 million available to be mopped up via the Nigerian stock market, subject to regulatory approvals.
Ardova Plc recently notified Nigerian Exchange Limited that Ignite Investments & Commodities Limited has approached its Board of Directors with the intention to acquire the shares held by other shareholders of the Company at an offer price of ₦17.38 per share.
The company will subsequently delist the Company from the stock market. In its market update, Afrinvest said, “While we expect this transaction to be fully ratified in the coming weeks, we hold that existing shareholders are not at risk of investment loss”.
In the local bourse, Ardova’s share price printed at ₦16.90 on Friday, representing a 9.4% outrun to Afrinvest’s 12-month Target Price (TP) of ₦15.45.
The investment firm said the proposed takeover price of ₦17.38 per share represents a premium of 2.8% and 12.4% respectively to the current market price and its target price.
“Hence, we recommend a HOLD rating for existing investors while potential investors should trade cautiously considering transaction-related cost which could erode any potential gains given the minute markup on the takeover price relative to market price”, Afrinvest told its clients via email.
Analysts explain that a hold rating indicates that investors should remain neutral as the expected total returns are not expected to exceed 10.0% based on the prevailing market price as of the report date.
It said the proposed transaction would be subject to review by the Securities and Exchange Commission as well as the approval of the Company’s shareholders. # ARDOVA: Analysts Guide ‘Hold’ Ahead of Takeover